Yet another piece on how the lack of affordable housing actually stymies economic growth and that it’s local politics is often more important than who sits in the White House. This Samantha Bee piece sort of distills it all:
The president cannot force richer cities to raise their minimum wages above the national minimum, nor can the executive branch alone force states to spend more money on poor neighborhoods’ public schools. But perhaps the best example is America’s housing policy. As much as tax policy or defense spending can shape the economic fortunes of families and generations, people are not just products of the District’s mandates. They are also products of local geography—which is determined city by city, and block by block. As Raj Chetty’s research has illuminated, children separated by just a few miles can expect dramatically different fortunes.
The return of record-high home prices in metros rich with new college grads is both an achievement and a warning. It’s an achievement, because there is a strong relationship between long-term growth and cities that assemble smart people. The economist Enrico Moretti estimated that every college graduate in a new industry eventually creates five more jobs.
But it’s a warning, too, because long-term growth requires that those people can afford to stay in the city. Vertiginous housing prices, which afflict San Francisco and San Jose and Manhattan and Brooklyn, are a drag on long-term productivity.
There are some good reasons why expensive cities tend to be on the water. It’s hard to builds apartments on the ocean. But restrictive housing policies—for example, height restrictions and rules prohibiting the construction of new homes or multifamily housing— are a man-made tax on agglomeration, pricing smart people out of places they want to live and the places where they could best work. This, in turn, deprives some cities of the very job multiplier that Moretti hailed. And so, cities that constrain their housing supply to maintain a certain urban aesthetic end up constraining much more—productivity, jobs, and wage growth.
Of course every city thinks that the silver bullet for their community is just to provide more space businesses and naturally the economic growth and jobs will follow, but as many studies have shown, even if those jobs are created if people cannot afford to live near those jobs the economic growth suffers because those jobs can’t be filled. Particularly if the some of the quoted five additional jobs created by a college graduate in a new industry is of the service variety and not necessarily one that brings in over $100K per year.
The discussion is going to come up, particularly around the Alameda Marina project, about not sacrificing a thriving industry for housing that “no one can afford.” As a whole I’m pretty apathetic to the entire project, I haven’t been paying real attention to it, but what I do take issue with is the immediate knee jerk reaction that this is some attempt to displace a needed industry with just more housing and it becomes yet another housing vs jobs fight. The issue, from what I understand is that there are needed infrastructure fixes needed and the quickest way to raise capital for that is, you guessed it, housing. Now, I don’t know if there is a way to fund the infrastructure improvements with existing uses, I’m sure that someone has attempted to answer this question, but it’s a shame that even when we hear story after story of displacement and people being priced out of Alameda or the region in general there is a hostility to building housing out of fear of a diminishing “quality of life.”
Now it’s not just the human aspect that is affected by lack of housing, it’s also a regional economic impact and — for some people — that’s more important than the faces and stories of displacement.